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In 2007, in the deep waters off the coast of Ghana, a small U.S.-based oil exploration company named Kosmos Energy hit the mother lode - a vast reservoir of oil now known as the Jubilee Field. The extraordinary find was among West Africa’s largest, promising to make a fortune for Ghana and Kosmos, and flaming the possibility of turning the infamous Gold Coast into a multimillion-barrel spigot of black gold.

But with the first oil production scheduled for later this year, Ghana and Kosmos are bitterly fighting over who ultimately will control the field - where up to 1.8 billion barrels worth of oil is said to be contained and with the possibility of more discoveries. The once-promising partnership is mired in a string of charges and countercharges.

Beyond the deal itself, the question remains whether Africa’s latest rising star - which won the blessing of both the Obama and Bush administrations - can avoid the corruption, cronyism and bad governance that has entrapped its neighbors.

Some observers say Ghana is trying to stop the ExxonMobil deal so the GNPC can buy the Kosmos stake at a reduced price and resell it to another company at a profit. A number of suitors also have shown an interest in acquiring the stake, including the Korea National Oil Corp. (KNOC), the China National Offshore Oil Corp. (CNOOC), and India’s Oil and Natural Gas Corp. (ONGC).

Ghanaian President John Atta Mills’ administration, according to critics, has targeted foreign companies that invested heavily in Ghana under the prior administration. Mr. Atta Mills, of the opposition National Democratic Congress (NDC) party, was narrowly elected president in a runoff election. The NDC also won a majority in parliament.

Since taking office in January 2009, critics said, the Atta Mills government repeatedly has sought to interfere with Kosmos‘ business, adding that it recently revoked a petroleum license for a Norwegian firm. Aker ASA recently was told by Ghanaian officials that its offshore exploration and development license - negotiated with the prior Ghanaian administration - was invalid.

Ghanaian officials maintain that Kosmos violated its contracts and the GNPC has the exclusive right to buy Kosmos‘ Jubilee stake - all of which Kosmos denies.

J. Peter Pham, an Africa scholar at the New York-based National Committee on American Foreign Policy, said Ghana’s recent actions toward foreign investors is “very worrisome,” echoing what several other businessmen and scholars have said. He described the Kosmos case as “the most egregious,” but not the only one.

“Ghana is behaving like it has the resource curse before it has even gotten any oil,” said Mr. Pham, referring to a phenomenon that for some counties has meant that having a lot of natural resources has led to bad governance and left most people worse off.

A State Department spokesman said Kosmos‘ concerns are being taken “seriously,” adding that department officials have raised those concerns with the Ghanaian government.

“We have conveyed to the Ghanaian government that we expect any U.S. company to be treated fairly, transparently and responsibly in accordance with Ghanaian law,” said the spokesman. “The Ghanaian response has generally been to acknowledge that responsibility and noting its legitimate right to apply Ghanaian law.”

The spokesman said department officials - including Donald Teitelbaum, U.S. ambassador to Ghana, and Johnnie Carson, assistant secretary of state for the Bureau of African Affairs - have sought to make sure the Ghanaian government “realizes the situation and its resolution reflects on Ghana’s reputation as an investment destination.”

Daniel Ohene Agyekum, Ghana’s ambassador to the United States, told The Washington Times he was “very hesitant” to comment on the matter or to respond to a detailed list of questions, noting that “a powerful delegation” from Ghana will meet with Kosmos officials in New York next week.

“It should not be difficult for us to sit at the table and resolve our differences,” he said. “The best way to resolve the differences is not through the newspaper but through a diplomatic exchange.”

Mr. Ohene Agyekum described the Kosmos issue as “an irritant in the long-standing, warm and friendly relationship between Ghana and the United States.”

Kosmos officials said they had been invited to a meeting but had not been provided with a date. Kosmos CEO Brian Maxted said he was hopeful the situation can be resolved and achieve a “win-win for all.”

“We have always viewed the possibilities of the project as a success story for everyone, especially the Ghanaian people,” he said.

But Jennifer Cooke, director of the Africa Program at the Center for Strategic and International Studies, a bipartisan international policy organization, said she guessed that “oil deals will become politicized.”

She said Ghana is considered “a strong performer” because it has had five successful elections and most recently had transfer of power from the ruling party to the opposition, but added that the United States “should not be blind to the problems that still exist” in Ghana.

“Many Ghanaians are concerned about continued corruption,” she said. “We need to look a little closer and not take continued success for granted. Ghana has to be careful that the vast influx of oil revenue does not reverse a lot of the progress on governance and democracy.”

She pointed out that “very few oil-producing countries in Africa have really solid democracies.”

Both the Obama and Bush administrations have praised Ghana for its successful transition to democracy. The country is viewed as a stable nation in a volatile subregion.

“The people of Ghana have worked hard to put democracy on a firmer footing, with peaceful transfers of power even in the wake of closely contested elections,” President Obama told the Ghanaian Parliament in July. He noted that Ghana had shown that “development depends upon good governance,” which he said had been missing in too many places in Africa.

Even as Mr. Obama told the members of Parliament that “oil brings great opportunities,” the newly elected Ghanaian government was quietly beginning to challenge Kosmos for control of the offshore oil sites - which promise to bring billions of dollars in revenue to the country.

The discovery

Kosmos Energy, a Dallas firm founded in 2003, sent its oil exploration team to Ghana in 2004 to search the deep waters off the shore of Western Africa. The team had made major oil discoveries in Equatorial Guinea a few years earlier with a different company.

Backed by two of the world’s largest private equity firms, Blackstone Group and Warburg Pincus, Kosmos signed a petroleum agreement with the Ghanaian government, then headed by President John Kufuor. The deal opened up 483,600 acres for exploration and possible production. An additional 273,298 acres was added in late 2006.

As part of the deal, Kosmos gave the GNPC 10 percent interest and promised to pay royalties and taxes on any oil that might be discovered. The agreements were approved by the Ghanaian Parliament.

Some critics have said the deal was too favorable to Kosmos, shortchanging Ghana on potential revenue. But others in the oil industry defend the deal, saying Kosmos took a huge and expensive risk on a deepwater project that had no guarantee of success.

A three-year hunt paid off in June 2007 when the Kosmos team discovered oil - and lots of it. Jubilee Field, named by the government because the discovery came the same year the country celebrated its 50th anniversary of independence, was said to hold up to 1.8 billion barrels of recoverable oil.

The oil was located in the Tano Basin in the Gulf of Guinea, seven miles from the Ghanaian coastline in water as deep as 5,900 feet. New wells have been drilled west of the original site in water up to 6,758 feet deep.

With the potential of producing in excess of 300 million barrels of recoverable oil in its first phase and a production capacity of 120,000 barrels of crude per day, the Ghanaian government was looking at as much as $1 billion a year in revenue once production started, according to the International Monetary Fund.

The 120,000 barrels a day would have made Ghana the 50th largest oil producer in the world, ahead of countries such as France, Turkey and Spain, according to statistics compiled by the Central Intelligence Agency’s World Factbook.

The local partner

The EO Group, a petroleum company owned by two Ghanaians, holds 1.75 percent interest in the Jubilee Field that could end up being worth as much as $200 million. EO first got Kosmos interested in coming to Ghana and then introduced the firm to government officials. Previous efforts by EO to get other U.S. oil companies involved had been unsuccessful.

EO’s two partners, George Owusu and Dr. Kwame Bawuah-Edusei, had close ties with the Kufuor administration. Mr. Owusu served as Kosmos‘ representative in Ghana. Dr. Bawuah-Edusei, who practiced medicine in the Washington, D.C. area, later was appointed by Mr. Kufuor as ambassador to the United States.

While it is not unusual for foreign companies to have local partners, the current Ghanaian government asked the U.S. Justice Department last year to determine whether EO or Kosmos violated the Foreign Corrupt Practices Act (FCPA), which prohibits payments to foreign officials to obtain or keep a business.

A Justice Department spokesman declined to comment on whether there was an inquiry or not.

Kosmos, in a written statement, said while there were no specific allegations of an FCPA violation, it “voluntarily and fully cooperated” with Justice in the inquiry. The company said its external legal team “reviewed over 8 million pages of information” and found “no violations of the FCPA by Kosmos or anyone associated with the company’s business in Ghana.”

The EO Group, in a written statement, said they “never paid or promised anything to anyone in the Ghana government in order to secure its role with Kosmos.” It said the company’s share of the find is fair because they “quite literally brought the parties together to achieve the discovery of the Jubilee Field that is a country-changing event for all Ghanaians.”

Early attempts to sell

In late May 2009, Kosmos discussed with the Ghanaian minister of energy tentative plans to sell its 23.5 percent stake in Jubilee Field to a petroleum production company through a competitive bidding process. Kosmos has said that as an oil exploration company, it wanted to get its cash and move on.

A June 2, 2009, letter from Kosmos to GNPC Director of Operations Thomas Manu - obtained from a source in Ghana - says that Ghana Energy Minister Joe Oteng-Adjei told the U.S. company that if it “fully involved ” the GNPC in the bidding process, the government would allow the sale.

Later that same month, Kosmos refused a request by Mr. Oteng-Adjei that it step down as technical operator for the development phase of Jubilee Field because it was considering selling its stake.

At about the same time, Mr. Manu wrote letters to potential bidders for the Kosmos stake, asking them if the U.S. company had given them access to petroleum data he said belonged to the GNPC. He said if so, the information had been released without the GNPC’s permission.

The dispute grew nastier. In a July 14, 2009, letter to one of the potential bidders, Mr. Manu said the GNPC “takes a serious view of the illegal manner in which data belonging to GNPC has been made available to you.” He accused the would-be bidder of “continued complicity in illegality” that affects Ghana and the GNPC.

Kosmos has maintained that it was fully entitled to disclose the information, and that it complied with all confidentiality requirements. The bidding was twice suspended or canceled to try to resolve the data issues and give the GNPC a chance to prepare a bid.

The GNPC, which claims to have “an exclusive pre-emptive right” to buy Kosmos‘ assets, twice failed to submit a bid. Kosmos said the GNPC has no such pre-emptive rights.

The Bank loans

The Ghanaian government, according to letters it sent to Kosmos, also delayed the U.S. company’s ability to obtain $750 million in loans to help fund its $850 million share of the $3.2 billion project costs to put Jubilee Field into production.

Kosmos needed the consent of Ghana and the GNPC to secure $100 million of the necessary $750 million from the World Bank’s International Finance Corp. (IFC). Both Ghana and the GNPC balked at giving consent, which usually is routine, according to oil industry observers.

A source close to the situation said Kosmos eventually found a way to work around the need for Ghana’s consent for the IFC loan.

In two February letters to top ExxonMobil officials, Mr. Oteng-Adjei said Ghana was “unable to support an ExxonMobil acquisition of Kosmos’s Ghana assets through the processes elected by Kosmos over the last year.” He said his government supported the strategic intent and efforts of the GNPC to acquire the Kosmos assets at a fair-market value.

He asked ExxonMobil to confirm that the agreement it had with Kosmos was no longer in effect and reminded ExxonMobil of the “importance that we attach to companies wishing to invest in Ghana respecting our laws and the sovereignty of Ghana.”

ExxonMobil declined to comment on the letters or on efforts by Ghana in the proposed sale. In a statement, the company said it “routinely evaluates potential development opportunities around the world,” adding that it was “not our practice to comment on the details of commercial discussions or opportunities.”

Kosmos has maintained that Ghana has no right to stop the ExxonMobil sale. While its petroleum agreements with Ghana say Kosmos cannot assign its interests without the written consent of the energy minister and the GNPC, the agreements also note that such consent “shall not be unreasonably denied, withheld or delayed.”

Oil analysts said such consent generally can be denied only if the buyer company lacks the financial or technical capabilities - which would not apply to ExxonMobil. The sale to ExxonMobil is at an impasse. Although Ghana has said it wants to buy Kosmos‘ stake at a fair price, it has not submitted a bid and it is unclear what it would be willing to pay.